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Positive
Strides Continue Towards the Achievement of Breakeven or Better
Operating Performance
MELVILLE,
N.Y., August 9, 2004 -- Andrea Electronics Corporation (AND)
today reported that net revenues for the quarter ended June
30, 2004 were approximately $1.3 million, as compared to net
revenues of $1.2 million for the same quarter in 2003. Net
loss for the quarter ended June 30, 2004 was approximately
$0.4 million, and a basic and diluted loss attributable to
common shareholders of $0.01 per share, as compared to net
income of approximately $1.1 million, and a basic and diluted
income attributable to common shareholders of $0.04 per share,
for the same quarter in 2003. The net income for the quarter
ended June 30, 2003 included income from discontinued operations
of approximately $2.2 million, or basic and diluted income
attributable to common shareholders of $0.10 per share.
Net revenues for the six months ended June 30, 2004 were approximately
$2.8 million, inclusive of sales returns recovery - restructuring
of $0.2 million, as compared to net revenues of $2.5 million
for the same six month period in 2003. Net loss for the period
ended June 30, 2004 was approximately $0.9 million, and a
basic and diluted loss attributable to common shareholders
of $0.05 per share, as compared to net income of approximately
$0.4 million, and a basic and diluted income attributable
to common shareholders of $0.01 per share, for the same six
month period in 2003. The net income for the period ended
June 30, 2003 included income from discontinued operations
of approximately $2.5 million, or basic and diluted income
attributable to common shareholders of $0.12 per share.
"While
sequential quarterly net revenues declined in the current
quarter, net revenues in the first six months of 2004, inclusive
of sales returns recovery - restructuring of $0.2 million,
still represented a 13% increase as compared to the first
six months of last year," stated Corisa L. Guiffre, Vice
President and Chief Financial Officer. "Additionally,
research and development and general, administrative and selling
expenses combined for the three and six month periods ended
June 30, 2004 decreased 33% and 25%, respectively, as compared
to the same periods last year. Andrea has experienced four
consecutive quarters of declining non-impairment related operating
losses, which continues to show the Company's overall and
continued fiscal accomplishments," Ms. Guiffre concluded.
"During
the second quarter of 2004, our balance sheet restructuring
initiative was completed successfully when the new investor
group funded the second $1.25 million capital infusion upon
shareholder approval and effective registration of the underlying
securities," stated Paul E. Donofrio, President and Chief
Executive Officer. "We continue to make very positive
strides towards the achievement of breakeven or better operating
performance. While net revenues in the current quarter came
in a bit lower than anticipated, due to sluggish demand for
our digital and, to a lesser extent, our computer headset
products, Andrea's period expenses have continued to decline
with the most comprehensive reductions taking place in the
overall research and development area. Although these are
certainly encouraging trends, garnering a sustainable higher
level of net revenues remains the key strategic goal for the
company. We thank the new investors for their follow through
as we remain focused on our sales and marketing initiatives
and committed to making requisite investments to further enhance
our top line growth," Mr. Donofrio concluded.
For the
second quarter of 2004, Andrea Anti-Noise Products revenues
were approximately $0.6 million, as compared to $0.5 million
for the second quarter of 2003. For the second quarter of
2004, Andrea DSP Microphone and Audio Software Products revenues
were approximately $0.7 million as compared to $0.7 for the
second quarter of 2003. The increase in the Andrea Anti-Noise
Products revenues is primarily attributable to increased product
shipments to several of our on-line collaboration and distance
learning customers.
For the
first six months of 2004, Andrea Anti-Noise Products revenues
were approximately $1.4 million, inclusive of sales returns
recovery - restructuring of $0.2 million, as compared to $1.3
million for the first six months of 2003. For the first six
months of 2004, Andrea DSP Microphone and Audio Software Products
revenues were approximately $1.4 million as compared to $1.2
for the first six months of 2003. The increase in the Andrea
DSP Microphone and Audio Software Products revenues is primarily
attributable to increased product shipments to several of
our OEM customers.
At June
30, 2004, we had total cash and cash equivalents of approximately
$2.4 million. Total assets were approximately $9.5 million
with total current assets of approximately $4.5 million. Total
liabilities were approximately $3.5 million with total current
liabilities of approximately $3.2 million. Total shareholders'
equity at June 30, 2004 was approximately $6.0 million, which
increased approximately $8.5 million from the December 31,
2003 total shareholders' deficiency of approximately $2.5
million. This increase is primarily due to the reclassification
of previously redeemable preferred stock from temporary equity
to permanent equity as a result of the balance sheet restructuring
and capital infusions that took place during the first half
of 2004.
About Andrea Electronics
Andrea Electronics Corporation designs, develops and manufactures
audio technologies and equipment for enhancing applications
that require high performance and high quality voice input.
The Company's patented Digital Super Directional Array (DSDA®),
patent-pending Directional Finding and Tracking Array (DFTA®),
patented PureAudio®, and patented EchoStop(TM) far-field
microphone technologies enhance a wide range of audio products
to eliminate background noise and ensure the optimum performance
of voice applications. Visit Andrea Electronics' website at
www.AndreaElectronics.com
or call 1-800-442-7787.
This press release may contain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform
Act of 1995. The words "anticipates," "believes," "estimates,"
"expects," "intends," "plans," "seeks," variations of such
words, and similar expressions are intended to identify forward-looking
statements. These statements are not guarantees of future
performance and involve matters that are subject to certain
risks, uncertainties and assumptions that are difficult to
predict, including economic, competitive, governmental, technological
and other factors, that may affect the business and prospects
of Andrea Electronics Corporation (the "Company"). The Company
cautions investors about the following significant factors,
which, among others, have in some cases affected the Company's
actual results and are in the future likely to affect the
Company's actual results and could cause them to differ materially
from those expressed in any forward- looking statements: the
rate at which Andrea Anti-Noise, DSDA, DFTA and other Andrea
technologies are accepted in the marketplace; the competitiveness
of Andrea Anti-Noise, DSDA, DFTA and other Andrea products
in terms of technical specifications, quality, price, reliability
and service; the sufficiency of the Company's funds for research
and development, marketing and general and administrative
expenses; infringement and other disputes relating to patents
and other intellectual property rights held or licensed by
the Company or third parties; the Company's continuing ability
to enter and maintain collaborative relationships with other
manufacturers, software authoring and publishing companies,
and distributors; the emergence of new competitors in the
marketplace; the Company's ability to compete successfully
against established competitors with greater resources; the
uncertainty of future governmental regulation; the Company's
ability to obtain additional funds; and general economic conditions.
No assurance can be given that the Company will achieve any
material sales or profits from the products introduced in
this release. These and other similar factors are discussed
under the heading "Cautionary Statement Regarding Forward-looking
statements" included in the Management's Discussion and Analysis
of Financial Condition and Results of Operations in the Company's
Annual Report on Form 10-KSB and in the Company's Annual Report
to shareholders, and in documents subsequently filed by the
Company with the Securities and Exchange Commission.
ANDREA ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months For the Six Months
Ended Ended
------------------------------------------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
------------------------------------------------
Revenues
Product revenues $872,567 $826,509 $1,800,219 $1,690,914
License revenues 416,670 416,670 833,340 833,340
------------------------------------------------
Revenues 1,289,237 1,243,179 2,633,559 2,524,254
Sales returns recovery
- restructuring - - 215,325 -
------------------------------------------------
Net revenues 1,289,237 1,243,179 2,848,884 2,524,254
Cost of revenues 586,458 717,250 1,278,587 1,288,728
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Gross margin 702,779 525,929 1,570,297 1,235,526
Research and
development
expenses 365,303 730,051 764,770 1,510,771
General,
administrative and
selling expenses 787,592 997,937 1,867,952 2,009,685
------------------------------------------------
Loss from
operations (450,116) (1,202,059) (1,062,425) (2,284,930)
------------------------------------------------
Other income
Interest income,
net 1,138 12,534 2,488 40,531
Rent and
miscellaneous
income 33,491 72,521 110,963 77,638
------------------------------------------------
Other income 34,629 85,055 113,451 118,169
------------------------------------------------
Loss from
continuing
operations (415,487) (1,117,004) (948,974) (2,166,761)
Income from
discontinued
operations,
net of $0 tax - 2,242,573 - 2,534,824
------------------------------------------------
Net (loss)
income $(415,487) $1,125,569 $(948,974) $368,063
================================================
Basic and diluted
(loss) income per
share:
Numerator for (loss)
income per share:
Loss from continuing
operations $(415,487) $(1,117,004) $(948,974) $(2,166,761)
Series C Redeemable
Convertible
Preferred Stock
dividends - 109,771 45,518 220,290
Series C Convertible
Preferred Stock
deemed dividend - - 469,465 -
Series D Convertible
Preferred Stock
beneficial
conversion feature - - 753,012 -
------------------------------------------------
Loss from continuing
operations
attributable to
common shareholders
- basic and
dilute (415,487) (1,226,775) (2,216,969) (2,387,051)
Income from
discontinued
operations, net of
$0 tax - 2,242,573 - 2,534,824
------------------------------------------------
Net (loss)
income
attributable
to common
shareholders -
basic and
diluted $ (415,487) $ 1,015,798 $ (2,216,969) $ 147,773
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Denominator for (loss)
income per share:
Basic and diluted
weighted average
shares 48,003,703 22,691,549 41,505,896 22,010,028
================================================
Basic and diluted
loss from
continuing
operations
attributable to
common shareholders
per share $ (.01) $ (.06) $ (.05) $ (.11)
Basic and diluted
income from
discontinued
operations per
share - .10 - .12
------------------------------------------------
Basic and diluted
net (loss) income
attributable to
common shareholders
per share $ (.01) $ .04 $ (.05) $ .01
================================================
ANDREA ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 2004 2003
(unaudited) (audited)
----------------------------------------------------------------------
Current Assets
Cash and cash equivalents $2,376,087 $1,725,041
Accounts receivable, net of allowance for
doubtful accounts of $24,789 and $56,697,
respectively 522,530 611,422
Note receivable - 354,986
Inventories, net 1,056,711 1,301,791
Prepaid expenses and other
current assets 578,037 181,018
------------------------
Total current assets 4,533,365 4,174,258
Property and equipment, net 162,411 219,182
Intangible assets, net 4,574,260 4,805,630
Other assets, net 261,907 268,090
------------------------
Total assets $9,531,943 $9,467,160
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LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIENCY)
----------------------------------------------
Current Liabilities:
Trade accounts payable $836,270 $731,092
Current portion of long-term debt 6,283 16,527
Accrued restructuring charges - 238,391
Deferred revenue 1,546,624 1,666,680
Other current liabilities 856,015 1,714,439
------------------------
Total current liabilities 3,245,192 4,367,129
Deferred revenue - 713,284
Other liabilities 250,729 238,671
------------------------
Total liabilities 3,495,921 5,319,084
------------------------
Series B Redeemable Convertible Preferred
Stock, net, $.01 par value; authorized: 1,000
shares; issued and outstanding: 0 shares - -
Series C Redeemable Convertible Preferred
Stock, net, $.01 par value; authorized: 1,500
shares; issued and outstanding: 677 shares;
liquidation value: $6,771,876 at December 31,
2003 - 6,692,603
------------------------
Commitments and contingencies
Shareholders' equity (deficiency):
Preferred stock, $.01 par value; authorized:
2,497,500 and 4,997,500 shares,
respectively; none issued and outstanding - -
Series C Convertible Preferred Stock, net,
$.01 par value; authorized: 1,500 shares;
issued and outstanding: 211 shares;
liquidation value: $2,108,459 at June 30,
2004 2 -
Series D Convertible Preferred Stock, net,
$.01 par value; authorized: 2,500,000 and 0
shares, respectively; issued and
outstanding: 2,164,286 and 0 shares,
respectively; liquidation value: $2,164,286
and $0, respectively 21,643 -
Common stock, $.01 par value and $.01 par
value, respectively; authorized:
200,000,000 shares; issued and outstanding:
49,448,944 and 27,245,932 shares,
respectively 494,489 272,459
Additional paid-in capital 76,109,305 65,578,653
Deferred stock compensation (25,000) (2,673)
Accumulated deficit (70,564,417)(68,392,966)
------------------------
Total shareholders' equity
(deficiency) 6,036,022 (2,544,527)
------------------------
Total liabilities and
shareholders' equity
(deficiency) $9,531,943 $9,467,160
========================
AT ANDREA
ELECTRONICS CORPORATION
Corisa L. Guiffre
Chief Financial Officer
1-800-447-7787
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